Additional taxes on the mining industry could reverse the government’s goal of increasing its revenue taken from the mining sector and discourage mining investments, according to foreign businessmen.
In a position paper the Joint Foreign Chambers (JFC) of the Philippines drafted, the additional taxes to be implemented through House Bills 00288, 00560, 01867, 02557, 04541, 04874 and 05022 would be costly to the mining industry.
The government is eyeing to create various fiscal regimes for the mining industry through these bills by imposing royalty rates on both metallic and non-metallic mining operations, as reported in a Philippine Star article.
The fiscal regime proposal also involves sliding scale government share based on margins with most adding additional shares on windfall profits.
The first package of Tax Reform for Acceleration and Inclusion (TRAIN) Law already increased the excise tax rate on all minerals by 100 percent.
Aside from the, the Philippine Mining Act mandates mining firms to set aside a minimum of 1.5 percent of their operating costs and one percent royalty on gross sales for indigenous cultural communities. These will be used to fund and implement social development and management programs.
JFC cited that without the increase in excise tax the mining taxes were already uncompetitive internationally.
“JFC believes that extending the royalty rates of existing mines outside the mineral reservations by any margin would make the fiscal regime unattractive for new mining investments and may cause the shutdown of existing mines with low profitability,” it was quoted in a Philippine Star report.
JFC added that the increase may affect other related industries like taxes on non-metallic materials could affect the cement industry, which could affect the government’s Build Build Build program.
While we appreciate the need for the administration to fund the many bold and innovative programs outlined in the 10-point socioeconomic agenda, we also believe that additional taxes over and above the current levels would not accomplish the goals of raising government’s share of mining revenues but rather reduce them. In our view, the result would likely be; curtailment of mine expansions, closing of low profit mines and limited or no new mining investments due to regional competition. The result would lead to falling employment and income in remote rural areas where it is needed the most,” JFC said.
The JFC includes American, Australian-New Zealand, Canadian, European, Japanese, Korean chambers and Philippine Association of Multinational Companies Regional Headquarters Inc. It has around 3,000 member companies and engaged in over $30 billion worth of investments in the country/
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